As appeared in Oil Express, published by OPIS, a Dow Jones Company, November 4, 2024
Massachusetts-based retail fuel and convenience-store chain Nouria on Thursday said it had reached a deal to acquire Enmarket's 132-store c-store network from Georgia-based Colonial Group. Financial terms were not disclosed. The deal merges two prominent regional players – Nouria in the Northeast with Enmarket in the Southeast. The transaction is the latest in a flurry of deals within the fuel and convenience space. It’s also a sign that consolidation of the fragmented industry is gaining momentum after being slowed by higher interest rates. The Federal Reserve lowered rates by 50 basis points in September and more rate cuts are anticipated. Interest "rates are starting to come down, which I would say is bringing more opportunities out of the woodwork," said Michael Kasbar, chairman and chief executive officer of large, public fuel marketer World Kinect, during the company’s third-quarter earnings call in late October. In October alone, for example, New York-based Stewart’s Shops signed an agreement to acquire the 45-unit Jolley convenience store chain and its heating oil and dealer supply. Mexican-based retail giant FEMSA closed on its $385 million purchase of the Delek US Holdings 249-unit DK convenience store chain. SpartanNash, a large, publicly held grocer, grocery wholesaler and fuel marketer, announced it is acquiring Markham Enterprises, a Michigan fuel marketer and retailer (See related story, Page 4). Mid Atlantic marketer Hough Petroleum also sold its commercial fuels and lubricants division to Globe Petroleum in New Jersey, to focus on its retail and wholesale fuel business. There also are many small- to mid-sized deals that have not been reported, Jeff Kramer, managing director of NRC Realty & Capital Advisors said this week in an interview. Kramer said there are more interested sellers than in the recent past and still many interested buyers.
Big Players Get Bigger
Industry consolidation also is inevitable as operating costs have soared. The large companies can more easily absorb those costs. And as the big get bigger, they gain more efficiencies, making it harder for some smaller companies to compete, Chris Rapanick, managing director of NACS research, said during a presentation at the NACS Show in October. Rapanick said he expects more mergers and acquisitions. There are “a lot” more “E” companies, convenience store chains of more than 500 stores, he said. NACS classifies convenience store company size by store counts as “A” with 1 to 10 stores, “B” with 11 to 50 stores, “C” with 51 to 200 stores and “D” with 201 to 500 stores. The Maverik and Kum & Go merger last year combined two D companies into one E company, he noted. While there are profitable smaller chains, “there is pressure on A operators to sell or go out of business,” said Rapanick. The smaller companies “are doing less well.” Some operators who thought about selling their business before, fear they might have missed their best opportunity. Recent higher operating costs affect earnings, which can lower transaction prices, Kramer noted. Others may not have updated their sites to larger stores that can accommodate food service. “They might be very much behind the trend. If you are behind on food service, where would you start? It’s not easy,” he said.
Growing Footprint
Both Nouria and Enmarket have large-format stores with established food service programs. Enmarket has stores in Georgia, South Carolina and North Carolina. The deal also includes 26 Enmarket car washes, the company said in a news release. Nouria has more than 170 c-stores and 61 car washes and supplies fuel to hundreds of retailers, according to its website. "We are thrilled to welcome Enmarket into the Nouria family," Tony El-Nemr, Nouria founder and chief executive officer, said. "This acquisition reflects our shared dedication to enhancing customer experiences and allows us to bring our award-winning service to new communities in the Southeast. We are confident this will be a seamless integration that benefits both our new customers and the Enmarket team." Nouria said it will integrate best practices, but all existing Enmarket stores will remain open to ensure a smooth transition. It added that it plans to "build on Enmarket's strong foundation by leveraging its own resources, technology and expertise to elevate the overall customer experience." Enmarket has been a subsidiary of the Colonial Group for more than 60 years. Christian Demere, Colonial's president and chief executive, said the "retail convenience industry is more dynamic than ever," and Nouria will help Enmarket continue to grow. Colonial Group, a fourth-generation, family-owned business founded in 1921, is one of America's largest privately held companies. It is active in the energy and chemical distribution industries and product storage and handling industries. "This transaction represents a positive step forward for both organizations, allowing each to focus on its strengths while ensuring Enmarket continues to thrive under Nouria's leadership," Demere said. The transaction is subject to customary regulatory approvals and closing conditions.
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